Alberta’s economy was expected to post a real GDP growth rate of 2.2 per cent this year, which would have been a modest recovery in a province that economists say has yet to fully recover from the previous recession in 2014, when oil prices crashed. Now, another brutal recession appears unavoidable as the price of Western Canadian Select crashed below the US$10-per-barrel mark on March 18.
“We are facing a period of profound adversity unlike any we have since the 1930s,” Alberta Premier Jason Kenney said Thursday as he announced a suite of financial programs including six-month mortgage, credit-card and line-of-credit payment deferrals through the provincially owned bank, ATB Financial.
“Alberta is going to be hit significantly as a result of both the coronavirus and the oil-price wars we’re seeing right now,” said Adam Legge, chief executive of the Business Council of Alberta. “That has a larger-than-normal impact here in Alberta.”
Legge said he expects major oil and gas producers will be able to “weather the storm,” but he’s concerned that drilling companies, oilfield services providers and engineering companies along with the gyms, restaurants and tourism operators that are shutting their doors “are going to be at greater risk.”Wishful Thinking Gone Bad
The Alberta government in its budget released in February had forecast that oil prices would average US$58 per barrel this year. The province has since acknowledged that assumption no longer holds and it’s readying a spending package in an effort to lift the economy, but it’s not ready to discuss what its fiscal picture will look like.A Precarious Economy
Matt Stewart, director of economics at the Conference Board, said previous projections for a turnaround in Alberta this year after several years of “terrible growth” are now gone.
“We expect no growth in 2020 for the year as a whole,” he said. “It didn’t take much to knock us towards a recession.”Alberta's predicament lays bare the need for visionary leadership, government that doesn't insist on trying to breathe life into its dead horse. Can Jason Kenney rise to the challenge? Hard to say but he has shown a fondness for wallowing in difficulty so long as he can blame it on someone else, a guy in Ottawa.